Sprint shareholders approve SoftBank’s bid

August 2013 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

August 2013 Issue

SoftBank Corp’s long-awaited acquisition of Sprint Nextel moved one step closer in June when around 80 percent of Sprint’s shareholders voted to approve and adopt the previously announced merger agreement between the two companies. SoftBank’s revised bid for a 72 percent stake in the company was around $21.6bn. The deal, which was completed on 10 July, ranks as the largest foreign acquisition in Japanese corporate history. The total cash consideration available to Sprint stockholders is $16.64bn.

As a result of the merger, the newly combined company has become the sixth largest telecommunications company in the world by revenue and the second biggest mobile internet carrier.

Under the terms of the deal Sprint Nextel will be dropping the Nextel part of its name. However, the rechristened Sprint Corporation will remain headquartered in Kansas City. The Sprint Corporation will be listed and traded on the New York Stock Exchange under the ticker symbol, ‘S’. SoftBank president Masayoshi Son will serve as Sprint’s chairman. In a statement announcing the deal Softbank noted that the company was “pleased to have the overwhelming support of Sprint shareholders”.

The acquisition of Sprint will give the company’s stockholders the option to receive cash to the amount of $7.65, or one share of new Sprint common stock for each share of Sprint common stock they own. This offer represents a 5 percent increase on the company’s initial offer of $7.30 per share. SoftBank also agreed to pay around an additional $1.5bn to the company’s shareholders instead of to Sprint itself. “Today is a historic day for our company, and I want to thank our shareholders for approving this transformative merger agreement,” said Sprint chief executive Dan Hesse. “The transaction with SoftBank should enhance Sprint’s long-term value and competitive position by creating a company with greater financial flexibility.”

The deal for Sprint marks the end of SoftBank’s near nine month bidding war with the US satellite TV operator Dish Network. Sprint had initially agreed to sell around 70 percent of the company to SoftBank for $20.1bn in October 2012 before Dish entered an unsolicited bid of $25.5bn for the firm in April 2013. However, although Dish’s total bid for the company was higher than the Softbank bid, it would have increased Sprint’s debt burden and was therefore deemed a more risky proposition.

The acquisition of Sprint, the US’ third largest mobile phone carrier network, sees Japanese firm SoftBank become one of the world’s largest mobile telephone operators. The deal will also shake up the US mobile industry by helping Sprint compete more effectively with the nation’s two largest operators, Verizon Wireless and AT&T Mobility. At the end of Q1 2013, Sprint had 31.3 million customers on contract paying an average of $61.47 per month and around 60 million customers overall. AT&T and Verizon Wireless each have more than 100 million customers.

Sprint’s shareholders will own 22 percent of the newly merged company, while SoftBank will own approximately 78 percent.As a result of the merger, the new Sprint will enjoy a considerably healthier balance sheet, and will be in a better position to continue the rollout of its 4G network and potentially take part in further industry consolidation. Most notably, Sprint is still attempting to acquire the remaining shares that it does not own in mobile and wireless telecommunication company Clearwire Corporation. Sprint currently owns around 51 percent of Clearwire and upped its bid for the company in June to $5 a share in an attempt to outbid its own potential suitor, Dish. Although Dish dropped its pursuit of Sprint in mid-June, it has continued to pursue Clearwire.